Despite the growing number of potholes slowing drivers on the commonwealth’s highways following pavement-unfriendly weather this spring, the Kentucky Transportation Cabinet continues to experience smooth sailing in its ongoing practice of awarding single-bid contracts which exceed its own internal cost estimates and drive up the price tag on road projects.
The cabinet in April alone awarded 19 single-bid contracts totaling $31.7 million — nearly $1 million more than what the agency estimated those projects should cost.
Bluegrass Institute Visiting Policy Fellow Andrew McNeill says a “back of the envelope” analysis shows 63 single-bid contracts exceeding the cabinet’s cost estimates and totaling $52 million were awarded to Kentucky’s road contractors just during the first four months of 2021.
Rep. Sal Santoro’s House Bill 561 would have prohibited the cabinet from awarding such uncompetitive contracts for amounts exceeding its own engineering estimates — a policy Santoro should continue to vigorously pursue while dropping the legislation’s misguided attempt to raise the state’s gas tax, which would harm Kentucky families the most.
The bill, which died in committee during this year’s legislative session but likely will be resurrected in some form in the future, also imposed higher fees to register vehicles or use electric ones — monies we’re often told are needed to recoup dollars no longer being collected at the pump due to increased energy efficiency and demand for less fuel.
Which may or may not be an accurate scenario.
Call me skeptical considering Frankfort’s ravenous appetite for turning over rocks in search of additional revenues to fund more, often needless, government spending versus finding and addressing wasteful practices in favor of taxpayers.
It’s also all a little too cozy considering large politically well-connected road contractors pushing hardest for the hike are also the most likely to benefit with even more overpriced bids to follow.
At the very least, let’s tap the brakes, get off at the next exit and have a rigorous debate along with increased transparency about the cabinet’s bidding process and spending practices before Frankfort raises prices at the pump by another cent.
Even those who buy into the unproven argument that the commonwealth doesn’t already extract enough from hardworking taxpayers to repair and build roads — the current two-year road budget spends $2.3 billion on roads and bridges — should seek the right policy for addressing the perceived shortfall.
Or at least a sensible beginning point like keeping contract costs within the estimates made by your agency’s own engineer, an educated and trained expert on how roads get built and repaired and what they should cost.
Instead, the transportation cabinet kicked off this year by awarding $9.3 million in 18 single-bid contracts to Kentucky’s highway industry in January alone — 16 of which exceeded the cabinet engineer’s estimates.
A single $1.5 million contract in Madison County exceeded the engineer’s cost assessment by a whopping $111,000.
The problem isn’t reasonable cost overruns occurring on the back end as projects unfold and unknown scenarios for completing them present themselves.
Rather these higher amounts are awarded on the front end — before a shovel even gets turned.
At least that’s how it seems to happen.
Much more needs to be known about how these bids — especially the uncompetitive ones — are handled.
But don’t expect a government agency which frequently ignores its own engineer’s estimates and awards oversized contracts primarily to large and politically connected road contractors to voluntarily provide such information.
Rather, it’s much likelier to occur when lawmakers — desperate to find additional money for projects in their districts and, in some cases, more objective support for a gas-tax increase — demand and authorize a full audit of the cabinet’s bidding practices.
Jim Waters is president and CEO of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read previous columns at www.bipps.org. He can be reached at jwaters @freedomkentucky.com and @bipps on Twitter.